Blencowe Receives $5M DFC Funding Boost

22 September 2023 14:30

Blencowe Resources Plc (LON:BRES) has achieved a significant milestone as the US International Development Finance Corporation (DFC) commits to funding 50% of the Project Definitive Feasibility Study (DFS) costs for the Orom-Cross Graphite Project, signifying a pivotal moment in the Company’s pursuit of establishing a sustainable, long-term graphite production operation.

Partnering with the Development Finance Corporation

The Development Finance Corporation, commonly referred to as the DFC, is the primary United States government finance institution dedicated to providing financially sound funding solutions for private-sector initiatives addressing critical global challenges.

One such challenge is the drive towards increased sustainability across the planet. As an agency of the U.S. federal government, the DFC represents U.S. interests on the international stage.

The DFC possesses substantial lending capacity, providing loans, guarantees, equity investments, and political-risk insurance for private-sector-led development projects, which encompass feasibility studies, technical assistance, and investments across diverse sectors, aiming to empower, innovate, invest in Africa, and combat climate change.

However, the grant to Blencowe marks the first time such an award has been given to a junior exploration Company, a ground-breaking milestone for all parties involved.

Orom-Cross and the DFC’s Goals

The Orom-Cross Graphite Project is closely aligned with several of the DFC’s core objectives, with it holding the potential to become one of the world’s largest graphite-producing operations, boasting an extensive mine life.

Graphite, a vital component in lithium-ion batteries used in electric vehicles (EVs) and renewable energy storage, plays a pivotal role in advancing sustainability.

As the demand for EVs continues to surge exponentially, securing a stable supply of graphite is imperative, making it a critical metal for the U.S. Government.

Given the ongoing tensions between the US and China, a dominant supplier of such resources, the partnership between Blencowe and the DFC enables the US to continue its strategic drive for further access to critical minerals and metals whilst reaching its renewable energy goals.

Orom-Cross is poised to deliver a greener graphite product through eco-friendly production practices, including hydro-power for all energy requirements. This commitment to sustainability aligns with the evolving standards in the renewable energy sector, where OEMs evaluate the sustainability credentials of every participant in the EV supply chain.

Technical Assistance Grant

Blencowe Resources is currently seeking up to US$4.5 million as a Technical Assistance Grant (TAG) from the DFC to cover costs associated with the Definitive Feasibility Study (DFS) for the Orom-Cross Graphite Project. The terms of this grant are notably advantageous to Blencowe as repayment would only be triggered upon the Project’s future production.

The TAG agreement involves DFC covering 50% of the agreed DFS costs, while Blencowe will fund the remaining portion, marking a significant step toward progressing the Project to full implementation.

Right of First Refusal

A distinctive feature of the TAG agreement is the inclusion of a Right of First Refusal (ROFR) clause. Under this provision, DFC gains priority access to provide debt financing for the entire Project implementation on commercial terms.

This arrangement significantly de-risks the Orom-Cross Project by involving an internationally respected financial institution as a key supporter for future funding.

The Significance of the Partnership

The TAG partnership with DFC not only reduces Project risk but also sets the stage for a comprehensive funding solution, covering a substantial portion of DFS costs while preserving Blencowe’s 100% ownership in the Project.

Cameron Pearce, Executive Chairman of Blencowe Resources, emphasised the importance of this milestone in Orom-Cross’s development.

“This milestone represents a significant step forward in the development of Orom-Cross,” he said.

“We have now further de-risked the Project by introducing a high quality funding partner that will ultimately cover a substantial portion of the costs to complete the DFS. We are therefore covering several important bases here to provide an all-encompassing funding solution to ensure that we can successfully bring Orom-Cross into production over the medium term once we have completed our final feasibility studies.”

Mr Pearse added that by retaining full ownership of the Project through the TAG agreement, the completion of the DFS will add significant value which the Company can retain for shareholders.

“DFC is a tremendous partner for Blencowe given its considerable experience assisting private-sector companies through project development stage and into production,” he said.

“DFC has experience of both the continent and the country we are operating within, as well as expertise dealing with Governments and other stakeholders. All parties understand the tremendous value that Orom- Cross presents going forward within a rapidly accelerating renewable energy market, and more specifically a rampant lithium-ion battery EV market.”

BRES’s London Securities Exchange-listed share price is currently trading at 4.25 pence (2.30pm UTC+ 8 hours).


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